Mugabe blocked rand adoption by Zimbabwe

Published: 19 May 2017 (1110 Views)

FORMER Finance minister Tendai Biti has disclosed that President Robert Mugabe in 2010 blocked the use of the South African rand as the official currency, possibly for fear of being politically subservient to his South African counterpart, Jacob Zuma.

Addressing a financial markets conference in Harare yesterday, Biti said Mugabe rejected proposals to adopt the rand way back in July 2010, arguing: "Why should we use another person's currency?"

Ironically, this was at a time Zimbabwe was already using the United States dollar and a basket of other currencies, including the South African rand.

"So I went to my principal on July 10, 2010, Mugabe, and said (I used to call him sekuru) ‘Sekuru (grandpa), I think this (rand adoption) is a good idea', (we used to be good friends) but nationalism came in the way," Biti revealed.

"The simple question from him was: ‘Why should we use another person's currency?' And I said but the United States dollar is another person's currency and nationalism just came in the way.

"Part of our problem is that we have to understand the importance of transitioning from certain values. Nationalism liberated us, but it was never designed to run economies."

Biti, who now leads the opposition People's Democratic Party, was responding to comments by economist and scholar Ashok Chakravarti, who had questioned why the rand was not being adopted as the main currency to solve the country's current cash shortages, amid reports that less than $250 million was currently in circulation.

Zimbabwe has been using a basket of nine currencies since 2009 to stem hyperinflation, with the US dollar being the main currency.

Biti's disclosures somehow vindicate Finance minister Patrick Chinamasa and Reserve Bank of Zimbabwe (RBZ) governor John Mangudya, who both have been accused by analysts and currency watchers of frustrating the use of the rand.

In an interview with State broadcaster ZBC on the eve of his 93rd birthday in February, Mugabe claimed he had no idea why Zimbabweans were not using the rand.

"I don't know why the Ministry of Finance, together with the RBZ, have not wanted to use other currencies. I have asked actually again and again kuti (that) why not euros, why not have yuan … why not have the rand alongside the dollar?

"At least, if we had the euro, I don't think we have sanctions on the euro, but the euro is slightly more expensive than the dollar, but the difference is minimal," he mused then.

Zimbabwe has been battling a cash crisis with analysts and business advocating the use of the rand to ease the shortages.

But Mangudya has been adamant that the rand will not be adopted as the main currency.